Manatt Partner Discusses Maturing CRE Loans with GlobeSt.com
“Here We Go Again”GlobeSt.com
February 27, 2012 – Manatt’s Tom Muller, co-chair of the firm’s Real Estate & Land Use Practice, spoke to GlobeSt.com about the new crop of commercial real estate (CRE) loans that will come to maturity in 2012.
According to GlobeSt.com, five-year CRE loans written in 2007 will come due, bringing a new wave of defaults. For lenders, this means that they must once again decide whether they will refinance, foreclose, extend or sell the loans.
Muller told GlobeSt.com that it’s questionable whether the lenders will be willing or able to refinance these loans, because “not only were those loans underwritten based on inflated bubble values, but many were also based on spectacularly optimistic underwriting standards popular at the time, which assumed steady upward economic trends.”
Nowadays, underwriting standards are substantially more conservative, noted Muller. He said that many of the 2007 loans coming due—to the extent they haven’t already defaulted—will not come close to meeting current underwriting standards.
Read the article here.
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